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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2005

OR

For the transition period from                      to                     

Commission file number: 333-84416

NEXTMEDIA OPERATING, INC.

(Exact name of registrant as specified in its charter)

(303) 694-9118

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The total number of shares of common stock, par value $.01 per share, outstanding as of May 10, 2005 was 3,000. The Registrant has no other class of common stock outstanding.

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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

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(Dollars in thousands)

(Unaudited)

1. Interim Financial Data and Significant Accounting Policies

The accompanying consolidated unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Management believes that the Company has made all adjustments necessary for a fair presentation of results of the interim periods and that these adjustments were of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. The interim results of operations and cash flows are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2005, due to seasonality and other factors. You should read the consolidated financial statements in conjunction with the consolidated financial statements of NextMedia Operating, Inc. and the notes thereto included in our annual report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2005. In this quarterly report on Form 10-Q, references to “the Company,” “we,” “our” and “us” refer to NextMedia Operating, Inc. and its subsidiaries, and the term “NextMedia” refers only to NextMedia Operating, Inc.

2. Recent Accounting Pronouncements

The SEC staff issued Staff Announcement No. D-108, Use of the Residual Method to Value Acquired Assets Other Than Goodwill (“D-108”), at the September 2004 meeting of the Emerging Issues Task Force (“EITF”). D-108 states that the residual method should no longer be used to value intangible assets other than goodwill. Rather, a direct method should be used to determine the fair value of all intangible assets required to be recognized under Statement of Financial Accounting Standards No. 141, Business Combinations. Registrants who have applied the residual method to the valuation of intangible assets for purposes of impairment testing under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, shall perform an impairment test using a direct value method on all intangible assets that were previously valued using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. The adoption of Staff Announcement No. D-108 did not have a material impact on the Company’s financial position or results of operation.

3. Acquisitions and Dispositions

Part of the Company’s operating strategy is to expand through prudent acquisition of broadcasting, outdoor and indoor advertising properties. In seeking acquisition opportunities, the Company generally seeks: (i) assets in markets with a demographic propensity for growth (i.e., population growth above average, above average growth in retail sales, etc.), (ii) markets where the Company believes it can assemble a group of assets generating over $1,000 in annual cash flow from operations, and (iii) assets in markets where the Company believes it can become a leader in terms of ratings, revenue share, or number of advertising faces. Each of the Company’s acquisitions meets at least one of these criteria.

In 2004, simultaneous with entering into purchase agreements to acquire five radio stations in Wilmington, North Carolina for a total of $24,500, the Company entered into local marketing agreements, or LMAs, with respect to those stations and determined that it is the primary beneficiary with respect to certain assets of two entities that are small, closely held organizations engaged in radio broadcasting activities. As a result, the Company consolidated the fair value of the assets to be acquired at December 31, 2004 in the accompanying financial statements pursuant to FIN-46R Consolidation of Variable Interest Entities. The effect of this consolidation at December 31, 2004 was the inclusion of $995 of property and equipment, $19,620 of indefinite-lived intangible assets and $3,885 of goodwill, with a corresponding inclusion of $24,500 in minority interest, representing the deferred purchase price of $24,500 under the fixed price purchase agreements. As a result of the LMAs, the Company’s financial statements include the broadcast revenues and operating expenses of the stations to be acquired since the date on which the Company entered into the LMAs.

In February 2005, the acquisition of these five radio stations was closed at purchase price of $24,500 with cash funded through the Company’s senior secured revolving credit facility (the “Revolving Credit Facility”), eliminating the $24,500 of minority interest. The final purchase allocation is consistent with the FIN-46R consolidation at December 31, 2004.

The following unaudited pro forma income statement information has been prepared as if the acquisitions made during the year ended December 31, 2004 and the three months ended March 31, 2005 had occurred on January 1, 2004. The pro

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(Dollars in thousands)

(Unaudited)

forma income statement information is not necessarily indicative of the results that actually would have been achieved if these acquisitions had been consummated on January 1, 2004.

4. Property and Equipment

Property and equipment consist of the following:

5. Intangible Assets

Intangible assets consist of the following:

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(Dollars in thousands)

(Unaudited)

The aggregate change in goodwill, advertising permits and FCC licenses in the period from December 31, 2004 to March 31, 2005 resulted entirely from the Company’s acquisition of radio assets. There were no impairment losses recognized during the period and no reporting units were disposed of.

Definite-lived Intangibles

The Company has definite-lived intangible assets that continue to be amortized in accordance with SFAS 142. These assets consist primarily of customer relationships and non-compete agreements which are amortized over their lives.

Total amortization expense from definite-lived intangible assets for the three months ended March 31, 2005 was approximately $1,610. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles as of December 31, 2004:

6. Accrued Expenses

Accrued expenses consist of the following:

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(Dollars in thousands)

(Unaudited)

7. Long-Term Debt

Long-term debt consists of the following:

The Company’s Revolving Credit Facility contains customary restrictive covenants that, among other things, limit the Company’s ability to incur additional indebtedness and liens in connection therewith, pay dividends and make capital expenditures above specified limits. Under the Revolving Credit Facility, the Company must satisfy specified financial covenants, such as a maximum total leverage ratio, a maximum senior leverage ratio and a minimum ratio of consolidated EBITDA to consolidated net cash interest expense. As of March 31, 2005, the Company was in compliance with all of these covenants. After taking into account these restrictive covenants, as of March 31, 2005, the Company had approximately $18,936 of borrowing capacity under its Revolving Credit Facility.

The Company’s 10.75% Senior Subordinated Notes due 2011 (the “Senior Subordinated Notes”) require the Company to make semi-annual interest payments of approximately $10,750 on January 1 and July 1 of each year. The indenture governing the notes contains certain restrictive covenants that, among other things, limit the Company’s ability to incur additional indebtedness and pay dividends. As of March 31, 2005, the Company was in compliance with these covenants.

8. Commitments and Contingencies

From time to time, the Company is subject to routine litigation incident to its business. Management does not expect these matters to have a material adverse effect upon the Company’s liquidity, results of operations or financial position.

The Company has no direct or indirect guarantees of indebtedness of others.

9. Segment Data

Based on information provided to the Chief Operating Decision Maker, principally the Executive Chairman of the Board of Directors and Chief Executive Officer and President, the Company has determined that two reportable operating segments—radio broadcasting and outdoor advertising—best reflect the Company’s current management and operations.

The radio broadcasting segment is comprised of radio stations and networks for which the Company is the licensee or for which the Company programs and sells on-air advertising time under local marketing agreements. At March 31, 2005, the radio broadcasting segment included 66 radio stations owned and operated by the Company. All of these stations operate in domestic markets. The radio broadcasting segment also operates various radio networks.

The outdoor advertising segment includes traditional outdoor advertising displays, such as roadside bulletins, posters and transit displays that the Company owns or operates under lease arrangements, as well as advertising displays that the Company installs in public locations, including restaurants, health clubs, retail stores and entertainment venues. At March 31, 2005, the outdoor advertising segment owned or operated over 5,100 outdoor displays and indoor advertising display faces in more than 2,400 retail locations across the United States. All of these displays are located in domestic markets.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the Company’s audited consolidated financial statements contained in the Company’s annual report on

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(Dollars in thousands)

(Unaudited)

Form 10-K as filed with the SEC on March 31, 2005. There are no intersegment sales or transfers. There are no customers that comprise greater than 10% of the consolidated revenues of the Company for the periods presented.

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(Unaudited)

10. Supplemental Guarantor Information

The Company’s Senior Subordinated Notes are guaranteed on a senior subordinated basis, jointly and severally, by all of the Company’s subsidiaries (the “Guarantor Subsidiaries”). The Company has collateralized its Revolving Credit Facility by granting a first priority-perfected pledge of its assets including, without limitation, the capital stock of the Company and its subsidiaries.

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(Dollars in thousands)

(Unaudited)

NextMedia Operating, Inc.

Supplemental Combining Balance Sheet

December 31, 2004

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(Unaudited)

NextMedia Operating, Inc.

Supplemental Combining Balance Sheet

March 31, 2005

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(Unaudited)

NextMedia Operating, Inc.

Supplemental Combining Statement of Operations

For the Three Months Ended March 31, 2004